Tuesday, December 29, 2015

Effective December 1st, AirAsia Japan [DJ] revamped its board by essentially relegating CEO Yoshinori Odagiri to Adviser, a largely ceremonial position, and instead promoting CFO Osamu Hata to CEO and hiring bankrupt Skymark Airlines' [BC/SKY] former Chairman Takashi Ide as Chairman and former President Masakazu Arimori as CFO (AirAsia Japan CEO to quit, ex-Skymark executives coming.). But what made AirAsia Group swap management during such important times when it is preparing to launch operations?

Airbus
A320-216(SL) JA01DJ/F-WWBV seen before delivery. It was handed over to
AirAsia Japan on October 9th, and arrived at Japan on October 16th.
Their second aircraft, to be adorned with a special livery designed by
Mika Ninagawa, will be delivered in February. (Photo: Tobias Gudat)

Reportedly, there was unmendable distrust between James Rhee, North Asia CEO for the AirAsia Group, and Mr. Odagiri. Japan's fifth LCC had been set back with a nine-month delay (AirAsia Japan is officially reborn; first flight June 2015.), largely due to shifting strategy to focus more on the international market rather than domestic, difficulties in recruiting pilots and setting up a maintenance scheme, and much-longer-than-anticipated preparation to apply for an Air Operator's Certificate (AOC), which it received on October 6th (New AirAsia Japan receives AOC; takeoff in April 2016.). But without Mr. Odagiri's strenuous yet patience-necessary talks with regulator Japan Civil Aviation Bureau (JCAB), AirAsia Japan could not have obtained it. However, Mr. Rhee could not wait any longer.On the other hand, Mr. Hata, who previously worked as CEO for Dell Japan, does not have any experience in the airline industry, let alone a unique market like Japan. So talks to headhunt the former Skymark duo reportedly started as early as late September, when they withdrew from Japan's embattled third largest airline after sponsors Integral Corporation and ANA Holdings installed a new board (Skymark relaunched with ANA sponsorship.). Mr. Ide and Mr. Arimori had maintained both official and personal relationships with Mr. Fernandes; the first AirAsia Japan (Mk I) was originally planned to be a joint-venture (JV) with Skymark until ANA stepped in, while AirAsia Group bid to sponsor Skymark (ANA and AirAsia bid to save Skymark.), and at one time Mr. Ide envisioned merging Skymark with the new AirAsia Japan in the long-term. But all of this was politically difficult as Skymark held 36 precious slot-pairs at heavily-regulated Tokyo/Haneda [HND/RJTT] (AirAsia admits Skymark bid defeat, Japan unit delay to 2016.).Meanwhile, its first aircraft, Airbus A320-216(SL) JA01DJ, which had arrived on October 18th (New AirAsia Japan receives first Airbus A320.), remained dormant at Nagoya/Chubu Centrair [NGO/RJGG], as the airline still did not have a working maintenance team. The aircraft's battery died and its auxiliary power unit (APU) went out of order, and it was not able to have an engine run-up until early December. Training flights were expected by November, but that too has been pushed back to at least January. It is widely believed that its current April 2016 in-service target could be missed by several months. Sources close to the matter also point out that it has already used almost half of its initial 7 billion JPY capital, and cash injections are likely necessary as it takes delivery of its second A320 in February and more employees come on-line.Can the ex-Skymark duo guide AirAsia Japan? They have wide and deep knowledge of the domestic market and expertise in running a low-cost operation in Japan's unique economic and regulatory environment, however, that said Skymark's success centered around its prized slots at Haneda while AirAsia Japan is based at Chubu Centrair, and Skymark has been a purely domestic carrier while AirAsia Japan plans to allocate at least 55% of its capacity to international. And there is reportedly already looming distrust between employees and the new management, and rumors point out Mr. Hata may be leaving the airline as well.

AirAsia Japan is a stepping stone for the AirAsia Group to expand its network to North America, and also has the potential to bring true (non-ANA/JAL) competition back to Japan. Hopes are still high AirAsia Japan would keep Mr. Fernandes' words, "This is Part 2 of AirAsia Japan's performance, and it will be the last. There won't be a third."Source: Diamond Online, 2015 December 7th. (in Japanese)Source: Aviation Wire, 2015 December 16th. (in Japanese)Source: Aviation Wire, 2015 December 17th. (in Japanese)

Saturday, December 19, 2015

On December 16th, Spring Airlines Japan [IJ/SJO] announced that it had received approval from regulator Japan Civil Aviation Bureau (JCAB) to launch international routes, paving way to commence Wuhan [WUH/ZHHH] and Chongqing [CKG/ZUCK] from their Tokyo/Narita [NRT/RJAA] hub on February 13th and 14th, respectively (Spring Airlines Japan files for Chongqing and Wuhan.).

Leased
from GECAS, Boeing 737-86N(WL) JA02GR is one of only three aircraft in Spring Japan's
tiny fleet. Initial plans to expand its fleet to 20 by 2017 have been
delayed indefinitely. (Photo: Spring Airlines Japan)

Wuhan will start with a three-times-weekly service, operating on Mondays, Wednesdays, and Saturdays, while Chongqing will operate four times a week on Tuesdays, Thursdays, Fridays, and Sundays. Both routes are timed to depart Narita in the morning for an afternoon arrival into the Chinese cities and an evening return to Japan. 189-seat Boeing 737-800s will be assigned. Tickets will go on sale at a later date not yet disclosed.

Parent Spring Airlines [9C/CQH] already connects the two Chinese cities with Osaka/Kansai [KIX/RJBB], while it also links Chongqing with Luoyang [LYA/ZHLY], Shanghai/Hongqiao [SHA/ZSSS], Shanghai/Pudong [PVG/ZSPD], Shenyang [SHE/ZYTX], Shenzhen [SZX/ZGSZ], and Shijiazhuang [SJW/ZBSJ]. It does not offer any domestic flights from Wuhan. Narita – Chongqing currently has Air China [CA/CCA] operating daily, while Narita – Wuhan sees a twice-weekly round-trip with China Southern Airlines [CZ/CSN] with All Nippon Airways [NH/ANA] slated to enter with a daily service on April 28th, 2016.

Chairman Wang Wei had disclosed over a year ago that the two cities would be their first overseas destinations (Spring Japan considering Chongqing and Wuhan.). The Japanese affiliate of China's largest LCC only started flying in August 2014 with three routes from Narita (Spring Airlines Japan commences operations.). However, Takamatsu [TAK/RJOT] was suspended in October (Spring Airlines Japan to drop Takamatsu.), leaving the fledgling carrier with just twice-daily Hiroshima [HIJ/RJOA] and daily Saga [HSG/RJFS] round-trips. That said, Spring Japan is not envisioned to become a major domestic player, but a vehicle of the Spring Airlines Group to better access the China – Tokyo market as well as carry Chinese travelers visiting multiple cities in Japan.

Wednesday, December 16, 2015

Jetstar Japan [GK/JJP] launched Osaka/Kansai [KIX/RJBB] – Taipei/Taoyuan [TPE/RCTP] on December 11th and Nagoya/Chubu Centrair [NGO/RJGG] – Taipei/Taoyuan on December 12th (Jetstar Japan is coming to Taipei in November.), roughly two weeks after adding Taiwan's capital on November 27th with a link from Tokyo/Narita [NRT/RJAA] (Jetstar Japan launches Taipei, next up Manila.). The three-times-weekly services will be increased to daily from December 23rd and 24th, respectively. All flights are operated by 180-seat Airbus A320s.

Airbus
A320-232(SL) JA14JJ departs Narita. Jetstar Japan's fleet is capped at
20 for the time being, and new services are launched by increasing
aircraft utilization. (Photo: Jetstar Japan)

The inaugural flight from Kansai departed on December 11th at 2210 JST, 10 minutes behind schedule, and landed in Taoyuan at 0000 CST, 10 minutes before published time. A320-232(SL) JA17JJ was assigned. Meanwhile, the first flight from Chubu Centrair departed on December 12th at 0731 JST, six minutes early, and touched down at Taoyuan at 0939 CST, 11 minutes before schedule. A320-232(SL) JA18JJ was deployed.

Although Nagoya – Taipei/Taoyuan is a new route for the Jetstar Group, Kansai – Taipei/Taoyuan already has sister Jetstar Asia Airways [3K/JSA] operating up to twice daily. The two together with Jetstar Airways [JQ/JST] have antitrust immunity to coordinate flight times and prices on international routes between Japan and Taiwan and the Philippines.

Japan – Taiwan is fast becoming a highly competitive market, though so far there seems to be enough room for all to claim a slice of the growing pie. Kansai – Taipei/Taoyuan is served by China Airlines [CI/CAL], EVA Airways [BR/EVA], Japan Airlines [JL/JAL], Peach Aviation [MM/APJ], Tigerair Taiwan [IT/TTW], and TransAsia Airways [GE/TNA], while Nagoya – Taipei/Taoyuan, a route that only had China Airlines and JAL until recently, sees competition from V Air [ZV/VAX] starting December 16th, Tigerair Taiwan from January 29th, 2016, and AirAsia Japan [DJ] from April next year (New AirAsia Japan receives AOC; takeoff in April 2016.).

Wednesday, December 9, 2015

On December 8th, Peach Aviation [MM/APJ] announced that it will launch Okinawa/Naha [OKA/ROAH] – Tokyo/Narita [NRT/RJAA] on February 20th, 2016. The new link will initially be operated three times per week, increasing to daily from the Summer 2016 timetable effective March 27th, using 180-seat Airbus A320-200s. The growing LCC will also expand Naha – Taipei/Taoyuan [TPE/RCTP] service from daily to 10 weekly from February 19th, and to twice daily from the Summer 2016 schedule.

Airbus
A320-214 JA809P along with two others prepare for their next assignment
at Kansai Airport's Terminal 2. Peach currently flies 17 A320s with the
18th due in March 2016. (Photo: Ryosuke Yano)

One-way fares for Naha – Narita start from 5,890 JPY for a Happy Peach ticket, which includes a 10-kilogram carry-on baggage allowance, and for Naha – Taipei/Taoyuan from 4,780 JPY. Tickets went on sale today. Both new round-trips are timed in the evening.

Narita – Naha is also served by All Nippon Airways [NH/ANA], mostly catering to international – domestic connections, along with Jetstar Japan [GK/JJP] and Peach's sister Vanilla Air [JW/VNL], making it the second route after Narita – New Chitose to see three LCCs competing. That said, ANA Holdings' two sister LCCs will initially avoid direct competition, as Vanilla's flight is in the morning while Peach's is in the evening, unlike with Narita – New Chitose. ANA has always considered consolidating the two as their network overlap becomes inevitable, however, while Vanilla is wholly-owned by ANA, it only holds a minority (though still significant) 39% stake in Peach and its CEO Shinichi Inoue has repeatedly shown preference to grow organically, making any merger out of question at least in the near term.